IN-DEPTH: Will China Take the Lead on Global Climate Leadership?

While the world is closely watching the first initiatives of the Trump presidency, speculations circulate about who would take the lead in guiding global climate action in case the United States take a step back. The European Union, once at the forefront, is burdened by internal divisions on major issues (e.g. Brexit, migration flows, economic recovery) and it is unlikely to regain its full leadership soon, also considering the crucial elections scheduled in 2017 (France and Germany, but also the Netherlands and maybe Italy) that might see antiEuropean positions gaining ground in key member states. In the last decade, the progressively closer climate cooperation of the United States and China, under the governments of Barack Obama and Xi Jinping, has created a two-fold leadership almost impossible to replicate, which was a key driving force behind the Paris agreement adoption and rapid entry into force. China’s moves are now under the spotlight to understand if the Asian giant can sustain the momentum even without its closer climate ally.

According to Chinese top officials, the intention is there. In a landmark speech at the annual meeting of the World Economic Forum in Davos, Chinese premier Xi Jinping made a clear statement in support of the global action on climate change, stating that the Paris climate deal (under which China pledged to peak CO2 emissions before 2030 and reduce carbon intensity by 60 – 65% by 2030) is a “hard won agreement” to which countries “should stick to, rather than walk away”. It was the first time a top Chinese leader officially participated in the Davos gatherings, another sign of the increasing global standing of China after the G20 summit in Hangzhou last year. In Davos the special envoy for climate change Xie Zhenhua also clarified China’s “firm attitude to engage in global climate change actions”, adding that the global trend towards sustainable growth “is not something that can be reversed by a single political leader” and that climate cooperation with the US will continue, mainly led by the US-China Climate Change Working Group. Few days later, the Chinese president reiterated his message at United Nations’ European headquarters in Geneva.

China’s determination to stick to the path of sustainable growth is clear also when looking at its domestic efforts. In late December the country launched its own carbon dioxide monitoring satellite (the third in the world after US and Japan) to gather firsthand data. Announcements made by government agencies in January have shed new light on how the country intends to achieve its 2020 climate and energy goals set by the 13th Five-Year Plan (13FYP) (see box). China’s National Energy Administration reaffirmed the cap on total energy consumption at 5 billion tonnes CO2e by 2020, equivalent to a 15-percent reduction of energy use per unit of GDP. The energy blueprint would lead to an increase in energy consumption from non-fossil fuels sources to 15 percent and from natural gas to 10 percent during the 2016-2020 period, while the share of coal is targeted to fall from 64 percent in 2015 to 58 percent. The Chinese government plans to invest 2.5 trillion yuan (around USD 361 billion, an average USD 72 billion per year) in renewable energy projects to support the energy transition up to 2020. According to Bloomberg’s New Energy Finance annual report, Chinese investment in renewable energy decreased to USD87.8bn in 2016, down 26 percent on the record spending USD 119.1bn in 2015. The figures set by the NEA’s plan seem thus in line with the current trend, mainly driven by China’s need to focus on grids and to deal with overcapacity, rather than to build new plants.

The most awaited event in 2017 is the launch of China’s national emission trading scheme, expected for the second half of this year. Targeting power, aviation and industrial sectors, it will become the world’s largest carbon market covering about 4-5 Gt CO2e. According to the annual Carbon Market Monitor review, the total emission allowances traded in 2016 amounted to 6Gt CO2e, for an overall value of EUR34 bn. The current seven Chinese regional pilot markets represent just 2 percent of the global traded volume and 1 percent of value. The challenges to shift from the pilots to the national trading scheme are thus huge, in terms of regulation, operation and monitoring. The implementation of China’s national ETS is supported by the European Union, a sign that EU-China climate cooperation has remained constant in the past years, although less evident compared to the high profile initiatives of China and the United States. May a reinforced EU-China concerted action guide global climate policy in case of a US U-turn? Or China will emerge as a new, single global leader? It is doubtless a key “issue to watch” among 2017’s climate policy developments.

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